Last week, Prime Minister Datuk Seri Najib Tun Razak announced the Budget 2018. Eight main agendas, or ‘thrusts’, were highlighted during the Budget 2018 which include fortifying the fourth Industrial Revolution and driving Malaysia’s digital economy.

Under this ‘thrust’, the government announced initiatives including matching grants, tax incentives, the development of the Digital Free Trade Zone (DFTZ), a regulatory sandbox, and many more.

At the centre of this drive, Malaysia Digital Economy Corporation (MDEC) said it is delighted that Budget 2018 is focused on accelerating growth and enhancing the well-being of the rakyat as well as in further enhancing Digital Malaysia.

It also pointed out that Malaysia’s digital economy continues to be a key growth driver, contributing about 18.2 per cent to Malaysia’s gross domestic product (GDP) this year and it is expected to exceed the projected target of 20 per cent earlier than 2020.

In her post-Budget 2018 commentary, MDEC’s chief executive officer (CEO) Datuk Yasmin Mahmood pointed out that the RM100 million allocation for the eRezeki and eUsahawan programmes would ensure that the digital economy continues to be inclusive for the well-being of the rakyat, and in particular, the B40 and M40 groups.

“With both programmes going into their third year, we estimate that 150,000 rakyat would be trained in 2018; resulting in 341,745 rakyat participating in both programmes with an estimated total income and revenue of RM544 million according to calculations,” she said.

Budget 2018 also unveiled plans to develop eLadang to encourage farmers to leverage on the latest smart farming technologies, and Big Data Analytic (BDA) to improve yield and income.

MDEC is also pleased by the RM250 million allocated for future education of the National Transformation 2050 (TN50) generation, and for the development of Science, Technology, Engineering and Mathematics (STEM) centres and improve Computer Science modules, including for Coding programmes.

“Our forecast reveals that we need one million digital workers, such as coders, application developers and software engineers, by 2025. With the continuous emphasis on talent development for the future of work, this is indeed encouraging for Malaysia to continue nurturing our bright young talent,” she commented.

Aside from that, the Malaysian government also announced initiatives to assist startups by introducing a slew of initiatives to encourage venture capital activities.

These initiatives include income tax exemption being widened to include management fees and performance fees, as well as a reduction in minimum investment limit in a venture company from 70 per cent to 50 per cent from 2018 to 2022.

“This is a visionary stance by the Malaysian Government as the start-up ecosystem is the job creators of the future.

“We introduced two highly successful initiatives last year, the first being the Malaysia Digital Hub initiative that supports start-ups and communities while creating greater opportunities for them to connect to the Asean and global digital ecosystem; and secondly, the Malaysia Tech Entrepreneur Programme (MTEP) – an initiative by the Malaysian Government that aims to attract global technopreneurs and help them to realise their fullest potential out of Malaysia and to scale their businesses regionally and globally,” said Yasmin.

On the DFTZ, MDEC highlighted that the development is proving to be a massive game changer for Malaysia which would see Malaysia’s SMEs doubling exports, and establish Malaysia as a regional trans-shipment hub for e-commerce logistics while creating 60,000 jobs by 2025.

“I am happy to say that the DFTZ will ‘Go Live’ on November 3 and 1,900 export-ready SMEs will be flagged off to begin their export journey. This is an encouraging number of SMEs as our previous target was 1,500 SMEs.

“For the first time, the world will see a physical and virtual zones with additional online and digital services to facilitate cross border eCommerce and invigorate internet based-innovation,” commented Yasmin.

Meanwhile, tech experts are also positive on the efforts announced during Budget 2018. Digital and technology spending in Malaysia is expected to rise by six per cent, placing the country ahead of most Asia Pacific countries.

Gartner Inc (Gartner) highlighted this in its post-Budget 2018 commentary and said, Malaysia, like the rest of the world, is on the brink of the fourth industrial revolution and digital economy era.

“Gartner is forecasting a six per cent growth in technology spending for 2018, putting Malaysia ahead of most Asia Pacific countries.

“With the initiatives announced in Budget 2018, Gartner is confident that Malaysia is on the right track towards become a fully digitised nation,” Gartner Research vice president Tervinderjit (TJ) Singh.

“With the announcements made in the Malaysia Budget 2018, we see an increased emphasis on preparing the nation to become a fully-developed digital economy through targeted initiatives such as the Malaysian Digital Policy.

“The upgrading of smart manufacturing facilities and Futurise Center in Cyberjaya reflect the government’s sustained commitment to invest and support the industry as it continues progressing to the next level.

“The RM83.5 million allocation to further develop the first ‘DFTZ’, which is expected to attract RM700 million in investments and creating 2,500 jobs also puts the nation in good stead. These investments will go into strengthening the nation’s infrastructure and raising import values to push Malaysia into becoming the region’s primary e-commerce hub,” he added.

In a statement, Cisco Malaysia’s managing director Albert Chai said, “Malaysia’s Budget 2018 is a step in the right direction for the nation’s digital journey thanks to the great emphasis on efforts to digitise the manufacturing sector.

“This marks the country’s pivotal shift from a labour-driven economy to a more knowledge-driven society. The rise of the fourth Industrial revolution (Industry 4.0) is definitely upon us.”

With the measures under Budget 2018, Cisco believed that Malaysian manufacturers would be better positioned to capitalise on the upcoming opportunities brought upon by digitisation.

“In its nascent stage, the combination of tax reliefs and grant allocation Smart Manufacturing facilities will incentivise more manufacturers to adopt new technologies such as automation, BDA and robotics,” Chai added.

“Digital innovation will shape the next wave of economic development in this country. But at the heart of this transformation is the people.

“I am particularly excited about the various measures aimed at developing a workforce that is future-ready. Of particular interest is the RM250 million allocation to educate the National Transformation 2050 (TN50) generation which encompasses the setting up of Science, Technology, Engineering and Mathematics (STEM) centres and improving Computer Science modules, including Coding programmes.

“At the same time, SMEs should not be left behind by the wave of progress. We laud the government’s measure, through Digital Free Trade Zone, to ensure the participation of 1,500 SMEs in the digital economy. Given that the economy is largely made up of SMEs, our progress towards becoming a digital economy will be hampered if they lag behind,” he added.

“There’s never been a better time to fast track Malaysia’s digital economy and Cisco looks forward to driving this vision, in tandem with the positive measures outlined in Budget 2018,” said Chai.